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Quantifying North Atlantic Hurricane Risk

RMS North Atlantic Hurricane Models help the market gain necessary insights about the current and evolving hurricane risk landscape, informing sound underwriting, portfolio management, reinsurance, and risk transfer decisions.

Optimize Your Portfolio

Utilize the models' basin-wide event methodology to assess key drivers of risk within and across regions to support portfolio growth and diversification strategies. The U.S. component is linked with the RMS® U.S. Inland Flood HD Model, providing the means to develop a complete view of wind, storm surge, and tropical cyclone precipitation-induced flooding in one place.

Maximize Profitability

Grow premiums through superior risk differentiation, selection, and ratemaking decisions, enabled by the most comprehensive suite of vulnerability curves, regions, and building inventory databases on the market.

Customize Your View of Risk

Stress test model assumptions, sensitivities, and uncertainties of hurricane risk by model component, including the impacts of near- and long-term climate trends, hazard, mitigation techniques, and evolving market conditions.  Assess, validate and ultimately select a view of risk that best aligns with your business needs, from underwriting through to portfolio management, reinsurance pricing and purchasing, and risk transfer decisions. 

North Atlantic Hurricane Models Key Features

Developed over 25+ years, the models provide the most comprehensive solution in the market for managing tropical cyclone risk.  Geographic coverage spans 40 countries, including 20+ U.S. states, Canada, Mexico, Bermuda, Central America, the Caribbean, and offshore platforms in the Gulf of Mexico.

Robust Event Set

The models are informed by a single, basin-wide stochastic event set in the Atlantic that captures the impacts of wind and storm surge for the full spectrum of landfalling, bypassing, and transitioning storms, and similar event catalogs for the East Pacific and Hawaii. 

Superior Hazard Data

The models employ high-quality satellite imagery to represent local variations in wind hazard, and they integrate a hydrodynamic surge modeling framework to capture the high fidelity impacts of hurricane-induced coastal flooding in the U.S. and parts of the Caribbean.

Comprehensive Vulnerability

The North Atlantic Hurricane Models enable more effective risk differentiation and selection decisions at the local level. With over 1,750 unique vulnerability functions across a variety of building characteristics, regions, and lines of business, the models reflect the latest market practices, building codes, and building code enforcement, enabling accurate insights into vulnerability risk differentiation for underwriting and managing hurricane risk.

Unparalleled Validation and Acceptance

Gain accurate insights into potential losses to inform pricing decisions, support rating agency discussions, and determine reinsurance limit needs with confidence.  The models have been extensively reviewed by clients, third-party experts, over $27 billion in detailed claims data and observations across 35+ historical events. This has supported 20+ years of FCHLPM certification in Florida and successful rate filings in 20+ states.

Feature Deep Dive

Single Basin-Wide Wind and Storm Surge Event Methodology

Hurricanes are a significant source of catastrophe risk throughout the North Atlantic Basin, including the United States, Bermuda, Canada, the Caribbean, Mexico, and Central America. The (re)insurance industry must effectively quantify, differentiate, and manage tropical cyclone risk accurately at the local level through to portfolio management, reinsurance, and capital management decisions. The RMS® North Atlantic Hurricane Models enable these applications, simulating realistic events throughout the region using a basin-wide event methodology, capturing the impacts of wind and storm surge for a variety of landfalling, bypassing, and transitioning storms.

Over $300 Billion in Industry Loss Data Spanning More Than 25 Years

The North Atlantic Hurricane Models have been well validated by thousands of wind and storm surge observations, over US$300 billion in industry loss data, and more than US$27 billion of location-level claims and exposure data (including Hurricanes Katrina, Ike, Sandy, Harvey, Irma, and Maria, and Michael) spanning more than 25 years. In addition, the underlying model assumptions and methodologies have been extensively reviewed by numerous third-party experts. RMS also incorporates the latest market practices and building codes for each region.

Realistic Representation of Hazard and Vulnerability

The North Atlantic Hurricane Models support effective risk differentiation and selection decisions down to the local level within and across regions. The models incorporate high-resolution satellite data (up to 15 meters), reflecting up-to-date land use and land cover information. This provides a realistic representation of local variations in wind hazard due to frictional impacts such as surface roughness, which is particularly important in urban areas with high concentrations of buildings.

The vulnerability module enables deeper and more accurate insights into risk differentiation for underwriting and managing hurricane risk. It includes unique functions representing regional vulnerability and over 1,750 combinations of primary characteristics for wind- and water-based sub-perils (storm surge for onshore risks and wave for offshore risks).

Complete and Correlated View of Hurricane Risk

Utilize the models' basin-wide event methodology to assess key drivers of risk to support portfolio growth and diversification strategies. The U.S. component is linked with the RMS U.S. Inland Flood HD Model, providing the means to develop a complete view of wind, storm surge, and tropical cyclone precipitation-induced flooding in one place.

Seamless Coastal to Inland Transitions

Underlying track and inland filling methodologies capture tropical cyclone characteristics throughout the full storm life cycle, reflecting the reality of how storms weaken as they lose energy over water or weaken post-landfall. This provides confidence for the market to underwrite inland hurricane risk, including the risk associated with transitioning storms.

High-Resolution Coastal Flood Risk Assessment

RMS integrates a hydrodynamic, time-stepping storm surge solution into our hurricane models to capture the complex interactions between wind and waves throughout the life cycle of a tropical cyclone. This comprehensive model solution simulates surge buildup at sea, accounting for changes in a storm’s size and intensity prior to landfall and the dynamic flow of water around complex coastlines.

With an accurate, high-resolution representation of hurricane-driven coastal flooding, (re)insurers can manage, select, and underwrite risk with more confidence, right down to the street   level, and better understand portfolio-wide tail risk driven by storm surge.

Forward-Looking Medium-Term Rates to Understand the Sensitivity of Hurricane Risk to Climate Trends

RMS is the only modeling company to provide a five-year forward-looking view of annual hurricane landfall frequency throughout the North Atlantic Basin. Separate from the long-term historical rates, the medium-term rates consider both current and projected near-term climate trends and represent the RMS default view of event frequency. Multiple views of event frequency allow (re)insurers to understand model sensitivities to hurricane risk across different timescales and ultimately select the view that best aligns with their view of risk.

Transparency and Detail to Understand Model Assumptions

The North Atlantic Hurricane Models come with extensive and detailed model documentation, including resources that are specific to supporting Solvency II validation.  This allows RMS to provide unprecedented transparency and support into various aspects of the models, including methodologies, validation, and change management.

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Resources

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Hurricane Laura
Blog
Atlantic Hurricane in 2020: Are We in Store for Another Record-Breaking Year?

In the midst of the 2020 Atlantic hurricane season, with storms forming in rapid sequence, records broken early in the season and four storms already producing significant damage in the Caribbean and U.S., whether we are headed for a record-breaking year is a good question. Various forecast agencies have issued mid-season updates, which signal prospects for the remainder of the season. But what about the 2020 season to date, and how does it compare to notably…

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Press Release
RMS Estimates that Insured Losses from Hurricane Isaias Will Be Between US$3bn – US$5bn

Newark, CA – August 14, 2020 – RMS, the world’s leading catastrophe risk solutions company, estimates that total insured losses from Hurricane Isaias will be between US$3.0 and US$5.0 billion. The estimate includes estimated losses to the National Flood Insurance Program (NFIP), which RMS expects to be between US$400m and US$700m. Hurricane Isaias insured loss estimates ranges for the U.S. and Caribbean (US$ billions): Region Insured Loss…

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Press Release
RMS Updates Views Of Risk For Asia Pacific Earthquake & North Atlantic Hurricane

Newark, California - April 29, 2019  RMS, the leading global risk modeling and data analytics firm, announced today the release of new views of earthquake risk in Taiwan and in six countries across Southeast Asia, as well as an update to its view of hurricane risk across the hurricane-impacted countries in the North Atlantic basin. The models will be delivered on version 18.1 of RiskLink and RiskBrowser, RMS’ industry-leading risk management software. …

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Press Release
RMS Estimates that U.S. Insured Losses from Hurricane Hanna Will Not Exceed USD $400 Million

Newark, CA – July 30, 2020 – RMS, the world’s leading catastrophe risk solutions company, estimates that the U.S. insurance losses from Hurricane Hanna will not exceed $400 million. This estimate represents insured losses associated with wind and storm surge, including losses to the National Flood Insurance Program (NFIP). “Wind and storm surge-driven losses for Hanna are expected to be consistent with losses projected by RMS’ HWind…

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Press Release
RMS Achieves Industry First With Certified Florida Commission On Hurricane Loss Projection Methodology (FCHLPM) Hurricane Models Available Simultaneously On-Premise And Cloud

Newark, CA. - June 24, 2019  Today, RMS, a leading global risk modeling and analytics firm, announced that its Version 18.1 RMS North Atlantic Hurricane Models were approved by the Florida Commission on Hurricane Loss Projection Methodology (FCHLPM) on June 13, 2019, for use in residential rate filings with the Florida Office of Insurance Regulation. The certification applies to Version 18.1 hurricane models on both RiskLink 18.1 and the…

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Press Release
RMS Estimates Hurricane Dorian Insured Losses For The U.S. Will Be Between USD $500 Million And $1.5 Billion

NEWARK, Calif. - September 13, 2019  RMS, a leading global risk modeling and analytics firm, estimated insured losses from Hurricane Dorian to the U.S. will be between $500 million and $1.5 billion. This estimate represents insured losses associated with wind and storm surge damage across the U.S., including losses to the National Flood Insurance Program (NFIP). This loss estimate for the U.S. reflects property damage and business interruption to…

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